- Business mogul Mohan Galot are seeking Sh33 billion in damages Standard Chartered Financial Services Limited.
- The financier has however, filed an application before the Apex Court seeking suspension of proceedings arguing that amount is too huge to afford.
Image: FILE
A local bank has asked the Supreme Court to suspend proceedings pending at the high court in which companies owned by business mogul Mohan Galot are seeking Sh33 billion in damages.
In an application before the Apex Court, Standard Chartered Financial Services Limited wants the proceedings suspended arguing that no financial institution can afford such a huge dent on its finances.
"The Sh33 billion is so colossal that it would draw any financial institution in Kenya and certainly any enterprise to its knees,"says the bank through senior counsel George Oraro.
Oraro said the suspension is to allow them pursue an appeal at the Supreme Court.
Court papers show the assessment of damages commenced in October, 2023, and is to be finalised on June 3, 2024.
It stems out of a loan advanced to the companies in the 80’s.
The matter, which is before High court Judge Alfred Mabeya, has been fixed for hearing on May 24, 2024.
“We are apprehensive that if a stay is not granted, the assessment will be finalised, judgment given and execution demanded with grave and irreversible consequences to us,” Oraro told court.
In a swift rejoinder, Galot through advocate Philip Nyachoti said their claim for damages in the sum of Sh33 billion is yet to be determined.
He said the figure, which has not been ascertained, should not be a ground to seek a stay of proceedings in the high court case.
"It's only fair and just that the assessment of damages proceeds as scheduled considering the many years the dispute has taken in court,” Nyachot told court.
According to Galot, the bank has not demonstrated any significant loss it would suffer if the suspension was not granted and the assessment of damages at Milimani proceeds as scheduled.
He argues that the application has been brought in bad faith and solely intended to delay and further prolong the resolution of the dispute between Standard Chartered Financial Services Limited and its companies following a judgment issued on December 16, 2022, that remitted the matter to the high court for assessment of damages.
“The intended appeal is obviously meant to frustrate us from realizing the fruits of the judgment and long-term litigation and ought to be dismissed,” Galot said.
The businessman has been embroiled in a protracted legal battle with the bank over a loan advanced in March, 1982.
King woolen Mills limited, then known as Manchester Outfitters Ltd, borrowed a loan of 1,300,000 Deutsche Marks and 1,050,000 Swiss Francs in 1982 from the lender and charged some property belonging to Galot Industries Ltd.
Both companies are owed by Galot.
According to Oraro, the company admitted it defaulted on the repayment and the lender was left with no option other than to appoint receiver managers.
The company, however, challenged the appointment saying the move was made in bad faith.
Galot through his advocate Nyachoti claimed that once the Euro currency loan was localised, it superseded all the previous agreements including a previous debenture of April, 1982, under which the bank purported to appoint receiver managers to run the affairs of his companies.
Nyachoti also said the appointment of the receiver managers led to closure of the firm's business in Athi River as the company suffered losses in terms of machinery and raw materials.
The matter has now escalated to the Supreme Court with Judges expected to determine how lenders should discharge securities used to obtain a loan.
Chief Justice Martha Koome is set to empanel a bench to determine the matter after the apex court certified it as urgent.